2015-11-24

Guessing the Form of Housing Rescue Policies

CITIC:

1. buy property for affordable housing. this policy is simplest, has the smallest side effects and can be tailored for each city

2. Historically, the most effective policies are often derived from credit policy. Remove than the total level of interest rates, the most important thing is to adjust the differential housing credit policy. Future restrictions on the purchase of second homes may be further liberalized.

3. reduce the minimum down payment. But still continue to adjust the minimum down payment ratio is more cautious, after all, if the down payment ratio down too much, the banking system will bring potential risks, stimulus effect is limited.

4. the overall tax burden of second-hand housing transactions is still relatively high, the real estate transaction taxes and fees can be reduced.

5. control of land supply, particularly to control three or four lines of urban land supply is a necessary means to resolve inventory issues.

Not sure how the last one would work because it would lead to lower local government revenues as well as reduce local GDP. Also, considering many of the worst cases aren't seeing much in the way of land sales, if any. Finally, it's unclear how easing buying restrictions and second-home rules will play out. It will help the market bottom and rebound sooner, but if psychology has turned, easing buying restrictions has little effect because the demand is gone.

The start of the article also says Shanxi, while the fourth province to cancel all buying restrictions, is the first to fire a shot in the war on housing inventory.